QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED August 31, 2013

OR

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM
TO

Commission File Number: 1-15829

FEDEX CORPORATION

(Exact
name of registrant as specified in its charter)

Delaware

62-1721435

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

942 South Shady Grove Road Memphis, Tennessee

38120

(Address of principal executive offices)

(ZIP Code)

(901) 818-7500

(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ

Accelerated filer ¨

Non-accelerated filer ¨

Smaller reporting company ¨

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No þ

Indicate the number of shares
outstanding of each of the issuers classes of common stock, as of the latest practicable date.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. These interim financial statements of FedEx Corporation (FedEx) have been
prepared in accordance with accounting principles generally accepted in the United States and Securities and Exchange Commission (SEC) instructions for interim financial information, and should be read in conjunction with our Annual
Report on Form 10-K for the year ended May 31, 2013 (Annual Report). Accordingly, significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed in our Annual Report.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (including normal
recurring adjustments) necessary to present fairly our financial position as of August 31, 2013, and the results of our operations and cash flows for the three-month periods ended August 31, 2013 and 2012. Operating results for the
three-month period ended August 31, 2013 are not necessarily indicative of the results that may be expected for the year ending May 31, 2014.

Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2014 or ended May 31 of the year referenced and
comparisons are to the corresponding period of the prior year.

BUSINESS ACQUISITIONS. As discussed in our Annual Report, on June 20, 2013, we
signed agreements to acquire the businesses operated by our current service provider Supaswift (Pty) Ltd. in five countries in Southern Africa. In addition, on September 2, 2013, we entered into an agreement to acquire Supaswifts business
in two additional countries. This acquisition will be funded with cash from operations and is expected to be completed in the second half of 2014, subject to customary closing conditions. The financial results of the acquired businesses will be
included in the FedEx Express segment from the date of acquisition and will be immaterial to our 2014 results.

EMPLOYEES UNDER COLLECTIVE
BARGAINING ARRANGEMENTS. The pilots of FedEx Express, which represent a small number of FedEx Expresss total employees, are employed under a collective bargaining agreement. The contract became amendable in March 2013, and the parties are
currently in negotiations. In addition to our pilots at FedEx Express, certain non-U.S. employees are unionized.

STOCK-BASED COMPENSATION. We have
two types of equity-based compensation: stock options and restricted stock. The key terms of the stock option and restricted stock awards granted under our incentive stock plans and all financial disclosures about these programs are set forth in our
Annual Report.

Our stock-based compensation expense was $45 million for the three-month period ended August 31, 2013 and $40 million for the
three-month period ended August 31, 2012. Due to its immateriality, additional disclosures related to stock-based compensation have been excluded from this quarterly report.

On June 1, 2013, we adopted the authoritative guidance issued by the Financial Accounting Standards Board requiring
additional information about reclassification adjustments out of accumulated other comprehensive income, including changes in accumulated other comprehensive income balances by component and significant items reclassified out of accumulated other
comprehensive income. We have adopted this guidance by including expanded accumulated other comprehensive income disclosure requirements in Note 2 of our condensed consolidated financial statements.

We believe that no other new accounting guidance was adopted or issued during the first three months of 2014
that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting as described in our Annual Report.

TREASURY SHARES. During the first quarter of 2014, we repurchased 2.8 million shares of FedEx common stock at an average price of $98 per share
for a total of $278 million. As of August 31, 2013, 7.4 million shares remained under existing share repurchase authorizations.

DIVIDENDS DECLARED PER COMMON SHARE. On August 16, 2013, our Board of Directors declared a quarterly dividend of $0.15 per share of common stock.
The dividend will be paid on October 1, 2013 to stockholders of record as of the close of business on September 10, 2013. Each quarterly dividend payment is subject to review and approval by our Board of Directors, and we evaluate our
dividend payment amount on an annual basis at the end of each fiscal year.

(2) Accumulated Other Comprehensive Income (Loss)

The following table provides changes in accumulated other comprehensive income (loss) (AOCI), net of tax, reported in our
condensed consolidated financial statements for the three-month periods ended August 31 (in millions):

The following table presents details of the reclassifications from AOCI for the three-month periods ended
August 31 (in millions):

Amount Reclassified fromAOCI(1)

Affected Line Item in the Income

Statement

2013

2012

Retirement plans:

Amortization of actuarial losses

$

(95

)

$

(129

)

Salaries and employee benefits

Amortization of prior service credits

28

29

Salaries and employee benefits

Total before tax

(67

)

(100

)

Income tax benefit

25

37

Provision for income taxes

AOCI reclassifications, net of tax

$

(42

)

$

(63

)

Net income

(1)

Amounts in parentheses indicate debits to earnings.

(3) Financing Arrangements

We have a shelf registration statement with the SEC that allows us to sell, in one or more future offerings, any combination of our
unsecured debt securities and common stock.

A $1 billion revolving credit facility is available to finance our operations and other cash flow needs and
to provide support for the issuance of commercial paper. The revolving credit agreement expires in March 2018. The agreement contains a financial covenant, which requires us to maintain a leverage ratio of adjusted debt (long-term debt, including
the current portion of such debt, plus six times our last four fiscal quarters rentals and landing fees) to capital (adjusted debt plus total common stockholders investment) that does not exceed 70%. Our leverage ratio of adjusted debt
to capital was 51% at August 31, 2013. We believe the leverage ratio covenant is our only significant restrictive covenant in our revolving credit agreement. Our revolving credit agreement contains other customary covenants that do not,
individually or in the aggregate, materially restrict the conduct of our business. We are in compliance with the leverage ratio covenant and all other covenants of our revolving credit agreement and do not expect the covenants to affect our
operations, including our liquidity or expected funding needs. As of August 31, 2013, no commercial paper was outstanding, and the entire $1 billion under the revolving credit facility was available for future borrowings.

Long-term debt, exclusive of capital leases, had carrying values of $3.0 billion at August 31, 2013 and May 31, 2013 compared with estimated fair
values of $3.0 billion at August 31, 2013 and $3.2 billion at May 31, 2013. The estimated fair values were determined based on quoted market prices and the current rates offered for debt with similar terms and maturities. The fair value of
our long-term debt is classified as Level 2 within the fair value hierarchy. This classification is defined as a fair value determined using market-based inputs other than quoted prices that are observable for the liability, either directly or
indirectly.

Net periodic benefit cost of the pension and postretirement healthcare plans for the three-month periods ended August 31
included the following components (in millions):

Pension Plans

PostretirementHealthcare Plans

2013

2012

2013

2012

Service cost

$

164

$

173

$

10

$

10

Interest cost

263

242

10

9

Expected return on plan assets

(373

)

(346

)





Recognized actuarial losses and other

67

100





$

121

$

169

$

20

$

19

Required contributions to our tax qualified U.S. domestic pension plans (U.S. Pension Plans) for the three-month
periods ended August 31 were $150 million in 2013 and $140 million in 2012. In September 2013, we made an additional contribution of $165 million to our U.S. Pension Plans. Our U.S. Pension Plans have ample funds to meet expected benefit
payments.

We provide a broad portfolio of transportation, e-commerce and business services through companies competing collectively, operating
independently and managed collaboratively under the respected FedEx brand. Our primary operating companies include FedEx Express, the worlds largest express transportation company; FedEx Ground Package System, Inc. (FedEx Ground),
a leading North American provider of small-package ground delivery services; and FedEx Freight, Inc. (FedEx Freight), a leading North American provider of less-than-truckload (LTL) freight services.

The FedEx Services segment operates combined sales, marketing, administrative and information technology functions in shared services operations that support
our transportation businesses and allow us to obtain synergies from the combination of these functions. For the international regions of FedEx Express, some of these functions are performed on a regional basis by FedEx Express and reported in the
FedEx Express segment in their natural expense line items. The FedEx Services segment is discussed further in our Annual Report.

The FedEx Services
segment provides direct and indirect support to our transportation businesses, and we allocate all of the net operating costs of the FedEx Services segment (including the net operating results of FedEx Office) to reflect the full cost of operating
our transportation businesses in the results of those segments. Within the FedEx Services segment allocation, the net operating results of FedEx Office, which are an immaterial component of our allocations, are allocated to FedEx Express and FedEx
Ground. The allocations of net operating costs are based on metrics such as relative revenues or estimated services provided. We believe these allocations approximate the net cost of providing these functions. We review and evaluate the performance
of our transportation segments based on operating income (inclusive of FedEx Services segment allocations). For the FedEx Services segment, performance is evaluated based on the impact of its total allocated net operating costs on our transportation
segments.

The operating expenses line item Intercompany charges on the accompanying unaudited financial
summaries of our transportation segments in Managements Discussion and Analysis of Results of Operations and Financial Condition reflects the allocations from the FedEx Services segment to the respective transportation segments. The
Intercompany charges caption also includes charges and credits for administrative services provided between operating companies and certain other costs such as corporate management fees related to services received for general corporate
oversight, including executive officers and certain legal and finance functions. We believe these allocations approximate the net cost of providing these functions and our allocation methodologies are refined as necessary to reflect changes in our
businesses.

Other Intersegment Transactions

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment. Billings for such
services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are
eliminated in our consolidated results and are not separately identified in the following segment information, because the amounts are not material.

The
following table provides a reconciliation of reportable segment revenues and operating income to our unaudited condensed consolidated financial statement totals for the three-month periods ended August 31 (in millions):

2013

2012

Revenues

FedEx Express segment

$

6,605

$

6,632

FedEx Ground segment

2,730

2,462

FedEx Freight segment

1,424

1,399

FedEx Services segment

375

389

Other and eliminations

(110

)

(90

)

$

11,024

$

10,792

Operating Income

FedEx Express segment

$

236

$

207

FedEx Ground segment

468

445

FedEx Freight segment

91

90

$

795

$

742

(7) Commitments

As of August 31, 2013, our purchase commitments under various contracts for the remainder of 2014 and annually thereafter were as
follows (in millions):

Aircraft andAircraft-Related

Other(1)

Total

2014 (remainder)

$

828

$

870

$

1,698

2015

1,121

182

1,303

2016

1,083

124

1,207

2017

891

100

991

2018

1,475

44

1,519

Thereafter

5,211

109

5,320

Total

$

10,609

$

1,429

$

12,038

(1)

Primarily vehicles, facilities, advertising contracts, and for the remainder of 2014, a total of $495 million of quarterly contributions to our U.S. Pension Plans.

The amounts reflected in the table above for purchase commitments represent noncancelable agreements to
purchase goods or services. As of August 31, 2013, our obligation to purchase four Boeing 767-300 Freighter (B767F) aircraft and nine Boeing 777 Freighter (B777F) aircraft is conditioned upon there being no event that
causes FedEx Express or its employees not to be covered by the Railway Labor Act of 1926, as amended. Commitments to purchase aircraft in passenger configuration do not include the attendant costs to modify these aircraft for cargo transport unless
we have entered into noncancelable commitments to modify such aircraft. Open purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above.

During the first quarter of 2014, we entered into supplemental agreements to purchase the 16 Boeing 757 (B757) option aircraft pursuant to an
agreement originally entered into in March 2013. Delivery of the aircraft will occur through 2015.

We had $416 million in deposits and progress payments
as of August 31, 2013 on aircraft purchases and other planned aircraft-related transactions. These deposits are classified in the Other assets caption of our consolidated balance sheets. In addition to our commitment to purchase
B777Fs and B767Fs, our aircraft purchase commitments include the B757 aircraft in passenger configuration, which will require additional costs to modify for cargo transport. Aircraft and aircraft-related contracts are subject to price escalations.
The following table is a summary of the key aircraft we are committed to purchase as of August 31, 2013 with the year of expected delivery:

B757

B767F

B777F

Total

2014 (remainder)

16

4

2

22

2015

11

12



23

2016



10

2

12

2017



10



10

2018



10

2

12

Thereafter



4

14

18

Total

27

50

20

97

A summary of future minimum lease payments under noncancelable operating leases with an initial or remaining term in excess of
one year at August 31, 2013 is as follows (in millions):

Operating Leases

Aircraftand RelatedEquipment

Facilitiesand Other

TotalOperatingLeases

2014 (remainder)

$

416

$

1,129

$

1,545

2015

448

1,438

1,886

2016

453

1,233

1,686

2017

391

1,340

1,731

2018

326

941

1,267

Thereafter

824

5,976

6,800

Total

$

2,858

$

12,057

$

14,915

Future minimum lease payments under capital leases were immaterial at August 31, 2013. While certain of our lease
agreements contain covenants governing the use of the leased assets or require us to maintain certain levels of insurance, none of our lease agreements include material financial covenants or limitations.

Wage-and-Hour. We are a defendant in a number of lawsuits containing various class-action allegations of wage-and-hour violations.
The plaintiffs in these lawsuits allege, among other things, that they were forced to work off the clock, were not paid overtime or were not provided work breaks or other benefits. The complaints generally seek unspecified monetary
damages, injunctive relief, or both. We do not believe that a material loss is reasonably possible with respect to any of these matters.

Independent Contractor  Lawsuits and State Administrative Proceedings. FedEx Ground is involved in numerous class-action lawsuits (including 30
that have been certified as class actions), individual lawsuits and state tax and other administrative proceedings that claim that the companys owner-operators should be treated as employees, rather than independent contractors.

Most of the class-action lawsuits were consolidated for administration of the pre-trial proceedings by a single federal court, the U.S. District Court
for the Northern District of Indiana. The multidistrict litigation court granted class certification in 28 cases and denied it in 14 cases. On December 13, 2010, the court entered an opinion and order addressing all outstanding motions for
summary judgment on the status of the owner-operators (i.e., independent contractor vs. employee). In sum, the court has now ruled on our summary judgment motions and entered judgment in favor of FedEx Ground on all claims in 20 of the 28
multidistrict litigation cases that had been certified as class actions, finding that the owner-operators in those cases were contractors as a matter of the law of 20 states. The plaintiffs filed notices of appeal in all of these 20 cases. The
Seventh Circuit heard the appeal in the Kansas case in January 2012 and, in July 2012, issued an opinion that did not make a determination with respect to the correctness of the district courts decision and, instead, certified two questions to
the Kansas Supreme Court related to the classification of the plaintiffs as independent contractors under the Kansas Wage Payment Act. The other 19 cases that are before the Seventh Circuit remain stayed pending a decision of the Kansas Supreme
Court.

The multidistrict litigation court remanded the other eight certified class actions back to the district courts where they were originally
filed because its summary judgment ruling did not completely dispose of all of the claims in those lawsuits. Three of those cases are now on appeal with the Court of Appeals for the Ninth Circuit. The other five remain pending in their
respective district courts, but two of these five matters have been settled for immaterial amounts, subject to court approval.

While the granting of
summary judgment in favor of FedEx Ground by the multidistrict litigation court in 20 of the 28 cases that had been certified as class actions remains subject to appeal, we believe that it significantly improves the likelihood that our independent
contractor model will be upheld. Adverse determinations in matters related to FedEx Grounds independent contractors, however, could, among other things, entitle certain of our owner-operators and their drivers to the reimbursement of certain
expenses and to the benefit of wage-and-hour laws and result in employment and withholding tax and benefit liability for FedEx Ground, and could result in changes to the independent contractor status of FedEx Grounds owner-operators in certain
jurisdictions. We believe that FedEx Grounds owner-operators are properly classified as independent contractors and that FedEx Ground is not an employer of the drivers of the companys independent contractors. While it is reasonably
possible that potential loss in some of these lawsuits or such changes to the independent contractor status of FedEx Grounds owner-operators could be material, we cannot yet determine the amount or reasonable range of potential loss. A number
of factors contribute to this. The number of plaintiffs in these lawsuits continues to change, with some being dismissed and others being added and, as to new plaintiffs, discovery is still ongoing. In addition, the parties have conducted only very
limited discovery into damages, which could vary considerably from plaintiff to plaintiff. Further, the range of potential loss could be impacted considerably by future rulings on the merits of certain claims and FedEx Grounds various
defenses, and on evidentiary issues. In any event, we do not believe that a material loss is probable in these matters.

In addition, we are defending
contractor-model cases that are not or are no longer part of the multidistrict litigation, two of which have been certified as class actions. These certified class actions were settled for immaterial amounts in the first quarter of fiscal year 2014,
subject to court approval. The other cases are in varying stages of litigation, and we do not expect to incur a material loss in any of these matters.

Other Matters. In August 2010, a third-party consultant who works with shipping customers to negotiate
lower rates filed a lawsuit in federal district court in California against FedEx and United Parcel Service, Inc. (UPS) alleging violations of U.S. antitrust law. This matter was dismissed in May 2011, but the court granted the plaintiff
permission to file an amended complaint, which FedEx received in June 2011. In November 2011, the court granted our motion to dismiss this complaint, but again allowed the plaintiff to file an amended complaint. The plaintiff filed a new complaint
in December 2011, and the matter remains pending before the court. In February 2011, shortly after the initial lawsuit was filed, we received a demand for the production of information and documents in connection with a civil investigation by the
U.S. Department of Justice (DOJ) into the policies and practices of FedEx and UPS for dealing with third-party consultants who work with shipping customers to negotiate lower rates. In November 2012, the DOJ served a civil investigative
demand on the third-party consultant seeking all pleadings, depositions and documents produced in the lawsuit. We are cooperating with the investigation, do not believe that we have engaged in any anti-competitive activities and will vigorously
defend ourselves in any action that may result from the investigation. While the litigation proceedings and the DOJ investigation move forward, and the amount of loss, if any, is dependent on a number of factors that are not yet fully developed or
resolved, we do not believe that a material loss is reasonably possible.

We have received requests for information from the DOJ in the Northern
District of California in connection with a criminal investigation relating to the transportation of packages for online pharmacies that may have shipped pharmaceuticals in violation of federal law. We responded to grand jury subpoenas issued in
June 2008 and August 2009 and to additional requests for information pursuant to those subpoenas, and we continue to respond and cooperate with the investigation. We believe that our employees have acted in good faith at all times. We do not believe
that we have engaged in any illegal activities and will vigorously defend ourselves in any action that may result from the investigation. The DOJ may pursue a criminal indictment and, if we are convicted, remedies could include fines, penalties,
financial forfeiture and compliance conditions. We cannot estimate the amount or range of loss, if any, as such analysis would depend on facts and law that are not yet fully developed or resolved.

FedEx and its subsidiaries are subject to other legal proceedings that arise in the ordinary course of their business. In the opinion of management, the
aggregate liability, if any, with respect to these other actions will not have a material adverse effect on our financial position, results of operations or cash flows.

(9) Supplemental Cash Flow Information

Cash paid for interest expense and income taxes for the three-month periods ended August 31 was as follows (in millions):

We are required to present condensed consolidating financial information in order for the subsidiary guarantors (other than FedEx Express)
of our public debt to continue to be exempt from reporting under the Securities Exchange Act of 1934, as amended.

The guarantor subsidiaries, which are
wholly owned by FedEx, guarantee $2.75 billion of our debt. The guarantees are full and unconditional and joint and several. Our guarantor subsidiaries were not determined using geographic, service line or other similar criteria, and as a result,
the Guarantor Subsidiaries and Non-guarantor Subsidiaries columns each include portions of our domestic and international operations. Accordingly, this basis of presentation is not intended to present our financial condition,
results of operations or cash flows for any purpose other than to comply with the specific requirements for subsidiary guarantor reporting.

We have
reviewed the condensed consolidated balance sheet of FedEx Corporation as of August 31, 2013, and the related condensed consolidated statements of income, comprehensive income and cash flows for the three-month periods ended August 31,
2013 and 2012. These financial statements are the responsibility of the Companys management.

We conducted our review in accordance with the
standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as
a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the
condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have
previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of FedEx Corporation as of May 31, 2013, and the related consolidated statements of income,
comprehensive income, changes in stockholders investment, and cash flows for the year then ended not presented herein, and in our report dated July 15, 2013, we expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of May 31, 2013, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Item 2. Managements Discussion and Analysis of Results of Operations
and Financial Condition

GENERAL

The
following Managements Discussion and Analysis of Results of Operations and Financial Condition (MD&A) describes the principal factors affecting the results of operations, liquidity, capital resources, contractual cash
obligations and critical accounting estimates of FedEx Corporation (FedEx). This discussion should be read in conjunction with the accompanying quarterly unaudited condensed consolidated financial statements and our Annual Report on Form
10-K for the year ended May 31, 2013 (Annual Report). Our Annual Report includes additional information about our significant accounting policies, practices and the transactions that underlie our financial results, as well as a
detailed discussion of the most significant risks and uncertainties associated with our financial condition and operating results.

the timing and amount of fluctuations in fuel prices and our ability to recover incremental fuel costs through our fuel surcharges.

The majority of our operating expenses are directly impacted by revenue and volume levels. Accordingly, we expect these operating expenses to fluctuate on a
year-over-year basis consistent with the change in revenues and volumes. Therefore, the discussion of operating expense captions focuses on the key drivers and trends impacting expenses other than changes in revenues and volume.

Except as otherwise specified, references to years indicate our fiscal year ending May 31, 2014 or ended
May 31 of the year referenced and comparisons are to the corresponding period of the prior year. References to our transportation segments include, collectively, our FedEx Express, FedEx Ground and FedEx Freight segments.

RESULTS OF OPERATIONS

CONSOLIDATED RESULTS

The following table compares summary operating results (dollars in millions, except per share amounts) for the three-month periods ended
August 31:

2013

2012

PercentChange

Revenues

$

11,024

$

10,792

2

Operating income

795

742

7

Operating margin

7.2

%

6.9

%

30

bp

Net income

$

489

$

459

7

Diluted earnings per share

$

1.53

$

1.45

6

The following table shows changes in revenues and operating income by reportable segment for the three-month periods ended
August 31, 2013 compared to August 31, 2012 (dollars in millions):

Revenues

Operating Income

Dollar Change

PercentChange

DollarChange

PercentChange

FedEx Express segment

$

(27

)



$

29

14

FedEx Ground segment

268

11

23

5

FedEx Freight segment

25

2

1

1

FedEx Services segment

(14

)

(4

)





Other and eliminations

(20

)

NM





$

232

2

$

53

7

Overview

Our
revenues and earnings increased in the first quarter of 2014 driven by the solid performance of each of our transportation segments, although our results include some significant headwinds from the net negative impact of fuel (described further
below) and one fewer operating day. While these factors constrained earnings growth in the first quarter of 2014, our results benefited from lower pension expense as well as the deferral of annual salary increases from the first quarter of 2014 to
the second quarter of 2014 for many of our employees. The results at our FedEx Express segment improved in the first quarter of 2014; however, ongoing shifts in demand from our priority international services to economy international services
continue to impact this business. The benefits realized from our voluntary severance program that commenced in 2013 will ramp up as the fiscal year progresses as the majority of scheduled employee departures will occur throughout the remainder of
2014.

The following graphs for FedEx Express, FedEx Ground and FedEx Freight show selected yield trends over the five
most recent quarters:

Revenue

Revenues increased 2% during the first quarter of 2014 primarily due to higher volumes and yield increases at our FedEx Ground segment. At FedEx Ground,
revenues increased 11% in the first quarter of 2014 due to higher volume from market share gains and increased yields as a result of rate increases. Revenues at FedEx Freight increased 2% due to higher weight per shipment, LTL yields and average
daily LTL shipments. At FedEx Express, revenues decreased slightly as revenue growth from stronger base U.S. business and prior year international domestic acquisitions was more than offset by the negative impact of lower fuel surcharges and one
fewer operating day.

The following table compares operating expenses expressed as dollar amounts (in millions) and as a percent of revenue for the three-month periods ended
August 31:

Percent of Revenue

2013

2012

2013

2012

Operating expenses:

Salaries and employee benefits

$

4,077

$

4,103

37.0

%

38.0

%

Purchased transportation

1,879

1,680

17.0

15.6

Rentals and landing fees

640

618

5.8

5.7

Depreciation and amortization

639

573

5.8

5.3

Fuel

1,104

1,138

10.1

10.6

Maintenance and repairs

480

542

4.3

5.0

Other

1,410

1,396

12.8

12.9

Total operating expenses

$

10,229

$

10,050

92.8

93.1

Operating margin

7.2

%

6.9

%

Operating income increased in the first quarter of 2014 primarily as a result of improved profitability at FedEx Express,
higher volumes and increased yields at FedEx Ground and improved performance at FedEx Freight. Our results in the first quarter of 2014 were negatively impacted by the timing lag which exists between when fuel prices change and when indexed fuel
surcharges automatically adjust and one fewer operating day. These factors were offset by lower aircraft maintenance and salaries and wages expense.

Operating expenses in the first quarter of 2014 included an increase of 12% in purchased transportation costs due to volume growth at FedEx Ground, prior year
international business acquisitions and higher utilization of third-party transportation providers. Depreciation and amortization expense increased 12% in the first quarter of 2014 primarily due to accelerated depreciation on certain aircraft and
aircraft recently placed in service at FedEx Express. Maintenance and repairs expense decreased 11% due to the continued modernization of our aircraft fleet, which impacted the timing of certain maintenance events. Salaries and employee benefits
expense benefited from lower pension expense, the delayed timing or absence of annual merit increases for many of our employees and lower headcount due to employees departing through our voluntary buyout program.

The following graph for our transportation segments shows our average cost of jet and vehicle fuel per gallon for the five most recent quarters:

Fuel costs decreased 3% in the first quarter of 2014 due to lower aircraft fuel usage. Based on a static analysis
of the impact to operating income of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel had a significant negative impact on operating income in the first quarter of 2014.

Our analysis considers the estimated impact of the reduction in fuel surcharges included in the base rates charged for FedEx Express and FedEx Ground
services. However, this analysis does not consider the negative effects that fuel surcharge levels may have on our business, including reduced demand and shifts by our customers to lower-yielding services. While fluctuations in fuel surcharge rates
can be significant from period to period, fuel surcharges represent one of the many individual components of our pricing structure that impact our overall revenue and yield. Additional components include the mix of services sold, the base price and
extra service charges we obtain for these services and the level of pricing discounts offered. In order to provide information about the impact of fuel surcharges on the trend in revenue and yield growth, we have included the comparative fuel
surcharge rates in effect for the first quarter of 2014 and 2013 in the accompanying discussions of each of our transportation segments.

Income
Taxes

Our effective tax rate was 36.2% for the first quarter of 2014 and 36.8% for the first quarter of 2013. For 2014, we expect an
effective tax rate between 36.5% and 37.0%. The actual rate, however, will depend on a number of factors, including the amount and source of operating income.

As of August 31, 2013, there were no material changes to our liabilities for unrecognized tax benefits from May 31, 2013.

We are subject to taxation in the United States and various U.S. state, local and foreign jurisdictions. Substantially all U.S. federal income tax matters
through fiscal year 2009 are concluded, and we are currently under examination by the Internal Revenue Service for the 2010 and 2011 tax years. It is reasonably possible that certain income tax return proceedings will be completed during the
next 12 months and could result in a change in our balance of unrecognized tax benefits. The expected impact of any changes would not be material to our consolidated financial statements.

Business Acquisitions

As discussed in our Annual
Report, on June 20, 2013, we signed agreements to acquire the businesses operated by our current service provider Supaswift (Pty) Ltd. in five countries in Southern Africa. In addition, on September 2, 2013, we entered into an agreement to
acquire Supaswifts business in two additional countries. This acquisition will be funded with cash from operations and is expected to be completed in the second half of 2014, subject to customary closing conditions. The financial results of
the acquired businesses will be included in the FedEx Express segment from the date of acquisition and will be immaterial to our 2014 results.

Outlook

We expect revenue and earnings growth to
continue into the second quarter and the remainder of 2014 driven by FedEx Ground and improved results at FedEx Express and FedEx Freight. Our expected results for 2014 will continue to be constrained by moderate growth in the global economy and
continued challenges from the demand shift trend from our priority international services to our economy international services.

We continued to execute
on the profit improvement programs we announced in 2013 during the first quarter of 2014. These activities are focused primarily at FedEx Express and FedEx Services. As previously noted, the majority of the benefits from our profit improvement
programs will not occur until 2015 and 2016. Our ability to achieve the profit improvement target and other benefits from these programs is dependent upon a number of factors, including the health of the global economy and future customer demand,
particularly for our priority services. No significant business realignment costs were incurred during the first quarter of 2014, and we are continuing to evaluate additional cost reduction actions to improve results.

During the first quarter an additional 5% of the 3,600 employees accepting voluntary cash buyouts departed the
company. As of August 31, 2013, approximately 45% of the total population of employees leaving the company had vacated their positions. The additional 55% will depart throughout the remainder of 2014, with approximately 25% remaining until
May 31, 2014. The benefits realized from our voluntary severance program will ramp up as the fiscal year progresses as the majority of scheduled employee departures will occur throughout the remainder of 2014.

Other Outlook Matters. For details on key 2014 capital projects, refer to the Liquidity Outlook section of this MD&A.

As
described in Note 8 of the accompanying unaudited condensed consolidated financial statements and the Independent Contractor Model section of our FedEx Ground segment MD&A, we are involved in a number of lawsuits and other
proceedings that challenge the status of FedEx Grounds owner-operators as independent contractors. FedEx Ground anticipates continuing changes to its relationships with its owner-operators. The nature, timing and amount of any changes are
dependent on the outcome of numerous future events. We cannot reasonably estimate the potential impact of any such changes or a meaningful range of potential outcomes, although they could be material. However, we do not believe that any such changes
will impair our ability to operate and profitably grow our FedEx Ground business.

See Forward-Looking Statements for a discussion of these
and other potential risks and uncertainties that could materially affect our future performance.

RECENT ACCOUNTING GUIDANCE

New accounting rules and disclosure requirements can significantly impact our reported results and the comparability of our financial statements.

On June 1, 2013, we adopted the authoritative guidance issued by the Financial Accounting Standards Board requiring additional information about
reclassification adjustments out of accumulated other comprehensive income, including changes in accumulated other comprehensive income balances by component and significant items reclassified out of accumulated other comprehensive income. We have
adopted this guidance by including expanded accumulated other comprehensive income disclosure requirements in Note 2 of our condensed consolidated financial statements.

We believe that no other new accounting guidance was adopted or issued during the first three months of 2014 that is relevant to the readers of our financial
statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting, as described in our Annual Report.

FedEx Express, FedEx Ground and FedEx Freight represent our major service lines and, along with FedEx Services, form the core of our reportable segments. Our
reportable segments include the following businesses:

The FedEx Services segment operates combined sales, marketing, administrative and information technology functions in shared services operations that support
our transportation businesses and allow us to obtain synergies from the combination of these functions. For the international regions of FedEx Express, some of these functions are performed on a regional basis by FedEx Express and reported in the
FedEx Express segment in their natural expense line items. The FedEx Services segment is discussed further in our Annual Report.

The FedEx Services
segment provides direct and indirect support to our transportation businesses, and we allocate all of the net operating costs of the FedEx Services segment (including the net operating results of FedEx Office) to reflect the full cost of operating
our transportation businesses in the results of those segments. Within the FedEx Services segment allocation, the net operating results of FedEx Office, which are an immaterial component of our allocations, are allocated to FedEx Express and FedEx
Ground. The allocations of net operating costs are based on metrics such as relative revenues or estimated services provided. We believe these allocations approximate the net cost of providing these functions. We review and evaluate the performance
of our transportation segments based on operating income (inclusive of FedEx Services segment allocations). For the FedEx Services segment, performance is evaluated based on the impact of its total allocated net operating costs on our transportation
segments.

The operating expenses line item Intercompany charges on the accompanying unaudited financial summaries of our transportation
segments reflects the allocations from the FedEx Services segment to the respective transportation segments. The Intercompany charges caption also includes charges and credits for administrative services provided between operating
companies and certain other costs such as corporate management fees related to services received for general corporate oversight, including executive officers and certain legal and finance functions. We believe these allocations approximate the net
cost of providing these functions and our allocation methodologies are refined as necessary to reflect changes in our businesses.

Certain FedEx operating companies provide transportation and related services for other FedEx companies outside their reportable segment. Billings for such
services are based on negotiated rates, which we believe approximate fair value, and are reflected as revenues of the billing segment. These rates are adjusted from time to time based on market conditions. Such intersegment revenues and expenses are
eliminated in our consolidated results and are not separately identified in the following segment information, because the amounts are not material.

FedEx Express offers a wide range of U.S. domestic and international shipping services for delivery of packages and freight including priority services, which
provide time-definite delivery within one, two or three business days worldwide, and deferred or economy services, which provide time-definite delivery within five business days worldwide. The following table compares revenues, operating expenses,
operating expenses as a percent of revenue, operating income and operating margin (dollars in millions) for the three-month periods ended August 31:

FedEx Express segment revenues decreased slightly in the first quarter of 2014 as revenue growth from stronger base U.S. business and prior year international
domestic acquisitions was more than offset by the negative impact of lower fuel surcharges, one fewer operating day and continued shifts in demand from our priority international services to our economy international services. International export
revenues were down in the first quarter of 2014 as revenue per package decreased 4% due to lower fuel surcharges, lower rates, and the demand shift to our lower-yielding economy services, while volume increased 4% driven by our economy services.
Total average daily freight pounds decreased 2% in the first quarter of 2014 due to weakness in economic global conditions. International domestic revenues increased 12% during the first quarter of 2014 due to international business acquisitions
during the first quarter of 2013.

Our fuel surcharges are indexed to the spot price for jet fuel. Using this index, the U.S. domestic and outbound
fuel surcharge and the international fuel surcharges ranged as follows for the three-month periods ended August 31:

2013

2012

U.S. Domestic and Outbound Fuel Surcharge:

Low

8.00

%

10.00

%

High

9.00

14.50

Weighted-average

8.50

12.12

International Fuel Surcharges:

Low

12.00

12.00

High

17.00

20.50

Weighted-average

15.36

16.13

In September 2013, we announced a 3.9% average list price increase effective January 6, 2014, for FedEx Express U.S.
domestic, U.S. export and U.S. import services.

FedEx Express Segment Operating Income

Our results for the FedEx Express segment for the first quarter of 2014 were significantly constrained by the net negative impact of fuel and one fewer
operating day. Despite the negative impact of these factors, FedEx Express operating income increased by 14% and operating margin increased by 50 basis points in the first quarter of 2014, driven by stronger base U.S. business and lower aircraft
maintenance and pension expense, partially offset by higher depreciation expense.

In the first quarter of 2014, salaries and employee benefits benefited
from lower pension expense, one fewer operating day and the delayed timing or absence of annual merit increases for many of our employees, partially offset by the impact of prior year international domestic acquisitions. Intercompany charges
decreased 8% due to lower allocated sales and information technology costs. Purchased transportation costs increased 13% due to prior year international business acquisitions, higher utilization of third-party transportation providers and costs
associated with the expansion of our freight-forwarding business at FedEx Trade Networks. Depreciation and amortization expense increased 14% during the first quarter of 2014 as a result of accelerated depreciation due to the shortened life of
certain aircraft and aircraft recently placed into service.

FedEx Express aircraft maintenance and repairs costs are largely driven by aircraft
utilization and required periodic maintenance events. When newer aircraft are introduced into our operating fleet, less maintenance costs are incurred. As a part of our fleet modernization program, FedEx Express has retired older, less efficient
aircraft prior to required periodic maintenance events and has introduced newly manufactured aircraft into the fleet. FedEx Express aircraft maintenance and repairs costs decreased 17% in the first quarter of 2014, due to the benefits from the
fourth quarter of 2013 retirement of 10 aircraft and related engines as we eliminated maintenance events for certain of these engines, along with the timing of other major maintenance events.

Fuel costs decreased 3% during the first quarter of 2014 due to lower aircraft fuel usage. Based on a static analysis of the net impact of year-over-year
changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel had a significant negative impact on operating income in the first quarter of 2014. This analysis considers the estimated impact of the reduction in fuel surcharges
included in the base rates charged for FedEx Express services.

FedEx Ground service offerings include day-certain service delivery to businesses in the United States and Canada and to nearly 100% of U.S. residences. FedEx
SmartPost consolidates high-volume, low-weight, less time-sensitive business-to-consumer packages and utilizes the United States Postal Service (USPS) for final delivery. The following table compares revenues, operating expenses,
operating expenses as a percent of revenue, operating income and operating margin (dollars in millions) and selected package statistics (in thousands, except yield amounts) for the three-month periods ended August 31:

Percent

2013

2012

Change

Revenues:

FedEx Ground

$

2,506

$

2,273

10

Percent of Revenue

FedEx SmartPost

224

189

19

2013

2012

Total revenues

2,730

2,462

11

100.0

%

100.0

%

Operating expenses:

Salaries and employee benefits

414

377

10

15.2

15.3

Purchased transportation

1,064

946

12

39.0

38.4

Rentals

92

74

24

3.4

3.0

Depreciation and amortization

111

103

8

4.1

4.2

Fuel

3

3



0.1

0.1

Maintenance and repairs

53

46

15

1.9

1.9

Intercompany charges

285

262

9

10.4

10.6

Other

240

206

17

8.8

8.4

Total operating expenses

2,262

2,017

12

82.9

%

81.9

%

Operating income

$

468

$

445

5

Operating margin

17.1

%

18.1

%

(100

)bp

Average daily package volume

FedEx Ground

4,313

3,898

11

FedEx SmartPost

2,092

1,664

26

Revenue per package (yield)

FedEx Ground

$

9.05

$

8.94

1

FedEx SmartPost

$

1.67

$

1.75

(5

)

FedEx Ground Segment Revenues

FedEx Ground segment revenues increased 11% during the first quarter of 2014 due to volume and yield growth at FedEx Ground and volume growth at FedEx
SmartPost.

Average daily volume at FedEx Ground increased 11% during the first quarter of 2014 due to market share gains resulting from continued growth
in our FedEx Home Delivery service and commercial business. FedEx Ground yield increased 1% during the first quarter of 2014 primarily due to rate increases and higher residential surcharges partially offset by lower fuel surcharge revenue.

FedEx SmartPost volumes grew 26% during the first quarter of 2014 as a result of the growth in e-commerce. Yields at FedEx SmartPost decreased 5% during the
first quarter of 2014 primarily due to higher postage costs and lower fuel surcharges, partially offset by rate increases. FedEx SmartPost yield represents the amount charged to customers net of postage paid to the USPS.

The FedEx Ground fuel surcharge is based on a rounded average of the national U.S. on-highway average price for a
gallon of diesel fuel, as published by the Department of Energy. Our fuel surcharge ranged as follows for the three-month periods ended August 31:

2013

2012

Low

6.50

%

7.00

%

High

7.00

8.50

Weighted-average

6.66

7.80

FedEx Ground Segment Operating Income

FedEx Ground segment operating income increased 5% during the first quarter of 2014 driven by higher volumes and revenue per package. The increase to
operating income was partially offset by the significant negative impact of fuel and higher network expansion costs, as we continue to invest heavily in the growing FedEx Ground and FedEx SmartPost businesses. The FedEx Ground segment results were
also negatively impacted by one fewer operating day. The decline in operating margin is attributable to the net negative impact of fuel.

Purchased
transportation costs increased 12% during the first quarter of 2014 primarily as a result of volume growth. Salaries and employee benefits expense increased 10% during the first quarter of 2014 primarily due to additional staffing to support volume
growth. Intercompany charges increased 9% in the first quarter of 2014 primarily due to higher allocated marketing, sales and information technology costs.

Independent Contractor Model

Although FedEx
Ground is involved in numerous lawsuits and other proceedings (such as state tax audits or other administrative challenges) where the classification of its independent contractors is at issue, a number of recent judicial decisions support our
classification, and we believe our relationship with the contractors is generally excellent. For a description of these proceedings, see Risk Factors and Note 8 of the accompanying unaudited condensed consolidated financial
statements.

For additional information on the FedEx Ground Independent Service Provider model, see Part 1, Item 1 of our Annual Report under the
caption Independent Contractor Model.

FedEx Freight service offerings include priority services when speed is critical and economy services when time can be traded for savings. The following table
compares revenues, operating expenses, operating expenses as a percent of revenue, operating income and operating margin (dollars in millions) and selected statistics for the three-month periods ended August 31:

Percent

Percent of Revenue

2013

2012

Change

2013

2012

Revenues

$

1,424

$

1,399

2

100.0

%

100.0

%

Operating expenses:

Salaries and employee benefits

598

599



42.0

42.8

Purchased transportation

234

226

4

16.4

16.2

Rentals

32

29

10

2.3

2.1

Depreciation and amortization

57

53

8

4.0

3.8

Fuel

145

148

(2

)

10.2

10.6

Maintenance and repairs

46

48

(4

)

3.2

3.4

Intercompany charges

121

111

9

8.5

7.9

Other

100

95

5

7.0

6.8

Total operating expenses

1,333

1,309

2

93.6

%

93.6

%

Operating income

$

91

$

90

1

Operating margin

6.4

%

6.4

%



bp

Average daily LTL shipments (in thousands)

Priority

61.1

61.4



Economy

27.6

26.6

4

Total average daily LTL shipments

88.7

88.0

1

Weight per LTL shipment (lbs)

Priority

1,244

1,215

2

Economy

993

999

(1

)

Composite weight per LTL shipment

1,166

1,150

1

LTL yield (revenue per hundredweight)

Priority

$

17.88

$

17.73

1

Economy

25.84

25.33

2

Composite LTL yield

$

19.99

$

19.72

1

FedEx Freight Segment Revenues

FedEx Freight segment revenues increased 2% during the first quarter of 2014 due to higher weight per shipment, LTL yields and average daily LTL shipments,
partially offset by one fewer operating day. LTL yield increased 1% during the first quarter of 2014 due to improvements in FedEx Freight Priority and FedEx Freight Economy yields resulting from higher rates. Weight per shipment increased 1% driven
by FedEx Freight Priority service offerings, while average daily LTL shipments increased 1% primarily due to FedEx Freight Economy.

Revenue per
hundredweight is a commonly-used indicator of pricing trends, but this metric can be influenced by many other factors, such as changes in fuel surcharges, weight per shipment, length of haul and the mix of freight. Generally, LTL freight is rated
using a standard class system for the LTL industry and classes are assigned based on transportation characteristics including density, risk and handling. Under the class system, low-value freight that is easy to handle, unlikely to damage and dense
will receive lower class ratings (and lower yields) than expensive, light, bulky freight which is highly susceptible to damage (and produces higher yields). As a result, changes in revenue per hundredweight do not necessarily indicate actual changes
in underlying base rates.

The indexed LTL fuel surcharge is based on the average of the national U.S. on-highway average price for a gallon
of diesel fuel, as published by the Department of Energy. The indexed LTL fuel surcharge ranged as follows for the three-month periods ended August 31:

2013

2012

Low

22.70

%

21.80

%

High

23.20

24.00

Weighted-average

23.00

22.60

In July 2013, FedEx Freight implemented a rate increase of 4.5% for LTL shipments. In July 2012, FedEx Freight implemented a
rate increase of 6.9% for LTL shipments.

FedEx Freight Segment Operating Income

Despite the headwind from one fewer operating day, operating income increased slightly while operating margin remained flat at FedEx Freight in the first
quarter of 2014, as higher weight per shipment, LTL yields and average daily LTL shipments were partially offset by higher intercompany charges.

In the
first quarter of 2014, intercompany charges increased 9% primarily due to higher allocated sales costs. Purchased transportation expense increased 4% due to higher rates and the increased utilization of rail, partially offset by a lower cost per
mile due to our ability to optimize mode of transportation. Depreciation and amortization expense increased 8% due to continued investment in transportation equipment and technology.

Fuel costs decreased 2% during the first quarter of 2014 due to increased utilization of rail and fuel efficiency improvements. Based on a static analysis of
the net impact of year-over-year changes in fuel prices compared to year-over-year changes in fuel surcharges, fuel had minimal impact on operating income in the first quarter of 2014.

Cash and cash equivalents totaled $5.1
billion at August 31, 2013, compared to $4.9 billion at May 31, 2013. The following table provides a summary of our cash flows for the three-month periods ended August 31 (in millions):

2013

2012

Operating activities:

Net income

$

489

$

459

Noncash charges and credits

810

782

Changes in assets and liabilities

(370

)

(338

)

Cash provided by operating activities

929

903

Investing activities:

Capital expenditures

(572

)

(972

)

Business acquisitions, net of cash acquired



(483

)

Proceeds from asset dispositions and other

10

12

Cash used in investing activities

(562

)

(1,443

)

Financing activities:

Principal payments on debt



(301

)

Proceeds from debt issuance



991

Proceeds from stock issuances

131

30

Excess tax benefit on the exercise of stock options

14

4

Dividends paid

(48

)

(44

)

Purchase of treasury stock

(278

)

(246

)

Other



(9

)

Cash (used in) provided by financing activities

(181

)

425

Effect of exchange rate changes on cash

(7

)

15

Net increase (decrease) in cash and cash equivalents

$

179

$

(100

)

Cash flows from operating activities increased $26 million in the first quarter of 2014 primarily due to lower variable
compensation payouts and higher net income, partially offset by an income tax refund received in the prior year. We made contributions of $165 million to our tax qualified U.S. domestic pension plans (U.S. Pension Plans) during the first
quarter of 2014 and $140 million in contributions to our U.S. Pension Plans during the first quarter of 2013. Capital expenditures during the first three months of 2014 were lower primarily due to decreased spending for aircraft and vehicle
replacement at FedEx Express. See Capital Resources for a discussion of capital expenditures during 2014 and 2013.

During the first quarter
of 2014, we repurchased 2.8 million shares of FedEx common stock at an average price of $98 per share for a total of $278 million. As of August 31, 2013, 7.4 million shares remained under existing share repurchase authorizations.

CAPITAL RESOURCES

Our operations are capital
intensive, characterized by significant investments in aircraft, vehicles, technology, facilities, and package-handling and sort equipment. The amount and timing of capital additions depend on various factors, including pre-existing contractual
commitments, anticipated volume growth, domestic and international economic conditions, new or enhanced services, geographical expansion of services, availability of satisfactory financing and actions of regulatory authorities.

The following table compares capital expenditures by asset category and reportable segment for the three-month
periods ended August 31 (in millions):

2013

2012

Dollar Change

Percent Change

Aircraft and related equipment

$

197

$

474

$

(277

)

(58

)

Facilities and sort equipment

125

113

12

11

Vehicles

149

264

(115

)

(44

)

Information and technology investments

71

91

(20

)

(22

)

Other equipment

30

30





Total capital expenditures

$

572

$

972

$

(400

)

(41

)

FedEx Express segment

305

749

(444

)

(59

)

FedEx Ground segment

161

86

75

87

FedEx Freight segment

40

44

(4

)

(9

)

FedEx Services segment

66

90

(24

)

(27

)

Other



3

(3

)

NM

Total capital expenditures

$

572

$

972

$

(400

)

(41

)

Capital expenditures during the first quarter of 2014 were lower than the prior-year period primarily due to decreased
spending for aircraft and vehicle replacement at FedEx Express. Aircraft and related equipment purchases at FedEx Express during the first quarter of 2014 included the delivery of two Boeing 757 (B757) aircraft.

LIQUIDITY OUTLOOK

We believe that our cash and
cash equivalents, cash flow from operations and available financing sources are adequate to meet our liquidity needs, including working capital, capital expenditure requirements and debt payment obligations. Our cash and cash equivalents balance at
August 31, 2013 includes $437 million of cash in offshore jurisdictions associated with our permanent reinvestment strategy. We do not believe that the indefinite reinvestment of these funds offshore impairs our ability to meet our domestic
debt or working capital obligations. Although we expect higher capital expenditures in 2014, we anticipate that our cash flow from operations will be sufficient to fund these expenditures. Historically, we have been successful in obtaining unsecured
financing, from both domestic and international sources, although the marketplace for such investment capital can become restricted depending on a variety of economic factors.

Our capital expenditures are expected to be approximately $4.0 billion in 2014 and include spending for aircraft and aircraft-related equipment at FedEx
Express, sort facility expansion, primarily at FedEx Ground, and vehicle replacement at all our transportation segments. We invested $197 million in aircraft and aircraft-related equipment in the first quarter of 2014 and expect to invest an
additional $1.2 billion for aircraft and aircraft-related equipment during the remainder of 2014. We have several aircraft modernization programs underway which are supported by the purchase of Boeing 777 Freighter, Boeing 767-300 Freighter and B757
aircraft. These aircraft are significantly more fuel-efficient per unit than the aircraft types previously utilized, and these expenditures are necessary to achieve significant long-term operating savings and to replace older aircraft. Our ability
to delay the timing of these aircraft-related expenditures is limited without incurring significant costs to modify existing purchase agreements.

During
the first quarter of 2014, we entered into supplemental agreements to purchase the 16 B757 option aircraft pursuant to an agreement originally entered into in March 2013. Delivery of the aircraft will occur through 2015.

We have a shelf registration statement filed with the Securities and Exchange Commission (SEC) that
allows us to sell, in one or more future offerings, any combination of our unsecured debt securities and common stock.

A $1 billion revolving credit
facility is available to finance our operations and other cash flow needs and to provide support for the issuance of commercial paper. The revolving credit agreement expires in March 2018. The agreement contains a financial covenant, which requires
us to maintain a leverage ratio of adjusted debt (long-term debt, including the current portion of such debt, plus six times our last four fiscal quarters rentals and landing fees) to capital (adjusted debt plus total common stockholders
investment) that does not exceed 70%. Our leverage ratio of adjusted debt to capital was 51% at August 31, 2013. We believe the leverage ratio covenant is our only significant restrictive covenant in our revolving credit agreement. Our
revolving credit agreement contains other customary covenants that do not, individually or in the aggregate, materially restrict the conduct of our business. We are in compliance with the leverage ratio covenant and all other covenants of our
revolving credit agreement and do not expect the covenants to affect our operations, including our liquidity or expected funding needs. As of August 31, 2013, no commercial paper was outstanding and the entire $1 billion under the revolving
credit facility was available for future borrowings.

In September 2013, we made $165 million in required contributions to our U.S. Pension Plans. Our
U.S. Pension Plans have ample funds to meet expected benefit payments. For the remainder of 2014, we have $330 million in required contributions to our U.S. Pension Plans.

Standard & Poors has assigned us a senior unsecured debt credit rating of BBB and commercial paper rating of A-2 and a ratings outlook of
stable. Moodys Investors Service has assigned us a senior unsecured debt credit rating of Baa1 and commercial paper rating of P-2 and a ratings outlook of stable. If our credit ratings drop, our interest expense may
increase. If our commercial paper ratings drop below current levels, we may have difficulty utilizing the commercial paper market. If our senior unsecured debt credit ratings drop below investment grade, our access to financing may become limited.

The following table sets forth a summary of our contractual cash obligations as of August 31, 2013. Certain of these contractual obligations are
reflected in our balance sheet, while others are disclosed as future obligations under accounting principles generally accepted in the United States. Except for the current portion of long-term debt, this table does not include amounts already
recorded in our balance sheet as current liabilities at August 31, 2013. We have certain contingent liabilities that are not accrued in our balance sheet in accordance with accounting principles generally accepted in the United States. These
contingent liabilities are not included in the table below. We have other long-term liabilities reflected in our balance sheet, including deferred income taxes, qualified and nonqualified pension and postretirement healthcare plan liabilities and
other self-insurance accruals. The payment obligations associated with these liabilities are not reflected in the table below due to the absence of scheduled maturities. Accordingly, this table is not meant to represent a forecast of our total cash
expenditures for any of the periods presented.

Payments Due by Fiscal Year (Undiscounted)(in millions)

2014(1)

2015

2016

2017

2018

Thereafter

Total

Operating activities:

Operating leases

$

1,545

$

1,886

$

1,686

$

1,731

$

1,267

$

6,800

$

14,915

Non-capital purchase obligations and other

227

180

123

100

44

109

783

Interest on long-term debt

92

138

138

138

138

2,583

3,227

Quarterly contributions to our U.S. Pension Plans

495











495

Investing activities:

Aircraft and aircraft-related capital commitments

828

1,121

1,083

891

1,475

5,211

10,609

Other capital purchase obligations

149

2

1







152

Financing activities:

Debt

250









2,740

2,990

Total

$

3,586

$

3,327

$

3,031

$

2,860

$

2,924

$

17,443

$

33,171

(1)

Cash obligations for the remainder of 2014.

Open
purchase orders that are cancelable are not considered unconditional purchase obligations for financial reporting purposes and are not included in the table above. Such purchase orders often represent authorizations to purchase rather than binding
agreements. See Note 7 of the accompanying unaudited condensed consolidated financial statements for more information.

Operating Activities

The amounts reflected in the table above for operating leases represent future minimum lease payments under noncancelable operating leases (principally
aircraft and facilities) with an initial or remaining term in excess of one year at August 31, 2013.

Included in the table above within the caption
entitled Non-capital purchase obligations and other is our estimate of the current portion of the liability ($1 million) for uncertain tax positions and amounts for purchase obligations that represent noncancelable agreements to purchase
goods or services that are not capital related. Such contracts include those for printing and advertising and promotions contracts. We cannot reasonably estimate the timing of the long-term payments or the amount by which the liability for
uncertain tax positions will increase or decrease over time; therefore, the long-term portion of the liability for uncertain tax positions ($40 million) is excluded from the table.

The amounts reflected in the table above for interest on long-term debt represent future interest payments due on our long-term debt, all of which are fixed
rate.

We had $416 million in deposits and progress payments as of August 31, 2013 on aircraft purchases and other
planned aircraft-related transactions.

Investing Activities

The amounts reflected in the table above for capital purchase obligations represent noncancelable agreements to purchase capital-related equipment. Such
contracts include those for certain purchases of aircraft, aircraft modifications, vehicles, facilities, computers and other equipment.

Financing
Activities

The amounts reflected in the table above for long-term debt represent future scheduled payments on our long-term debt. For the remainder
of 2014, we have scheduled principal debt payments of $250 million.

Additional information on amounts included within the operating, investing and
financing activities captions in the table above can be found in our Annual Report.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make
significant judgments and estimates to develop amounts reflected and disclosed in the financial statements. In many cases, there are alternative policies or estimation techniques that could be used. We maintain a thorough process to review the
application of our accounting policies and to evaluate the appropriateness of the many estimates that are required to prepare the financial statements of a complex, global corporation. However, even under optimal circumstances, estimates routinely
require adjustment based on changing circumstances and new or better information.

GOODWILL. Goodwill is tested for impairment between annual tests
whenever events or circumstances make it more likely than not that the fair value of a reporting unit has fallen below its carrying value. We do not believe there has been any change of events or circumstances that would indicate that a reevaluation
of the goodwill of our reporting units is required as of August 31, 2013, nor do we believe the goodwill of our reporting units is at risk of failing impairment testing. For additional details on goodwill impairment testing, refer to Note 1 of
our Annual Report.

Information regarding our critical accounting estimates can be found in our Annual Report, including Note 1 to the financial
statements therein. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors and with our independent registered public accounting firm.

FORWARD-LOOKING STATEMENTS

Certain statements in this
report, including (but not limited to) those contained in Outlook, Liquidity, Capital Resources, Liquidity Outlook, Contractual Cash Obligations and Critical Accounting
Estimates, and the General, Retirement Plans, and Contingencies notes to the consolidated financial statements, are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 with respect to our financial condition, results of operations, cash flows, plans, objectives, future performance and business. Forward-looking statements include those preceded by, followed by or that include the words
may, could, would, should, believes, expects, anticipates, plans, estimates, targets, projects, intends
or similar expressions. These forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated (expressed or implied) by such forward-looking statements, because of, among other things,
potential risks and uncertainties, such as:

significant changes in the volumes of shipments transported through our networks, customer demand for our various services or the prices we obtain for our services;



damage to our reputation or loss of brand equity;



disruptions to the Internet or our technology infrastructure, including those impacting our computer systems and Web site, which can adversely affect our operations and reputation among customers;



the price and availability of jet and vehicle fuel;



our ability to manage our cost structure for capital expenditures and operating expenses, and match it to shifting and future customer volume levels;



the impact of intense competition on our ability to maintain or increase our prices (including our fuel surcharges in response to rising fuel costs) or to maintain or grow our market share;



our ability to effectively operate, integrate, leverage and grow acquired businesses, and to continue to support the value we allocate to these acquired businesses, including their goodwill;



our ability to maintain good relationships with our employees and prevent attempts by labor organizations to organize groups of our employees, which could significantly increase our operating costs and reduce our
operational flexibility;



the impact of costs related to (i) challenges to the status of FedEx Grounds owner-operators as independent contractors, rather than employees, and (ii) any related changes to our relationship with these
owner-operators;



our ability to execute on our business realignment program;



the impact of any international conflicts or terrorist activities on the United States and global economies in general, the transportation industry or us in particular, and what effects these events will have on our
costs or the demand for our services;



any impacts on our businesses resulting from new domestic or international government laws and regulation, including regulatory actions affecting global aviation or other transportation rights, increased air cargo and
other security or safety requirements, and tax, accounting, trade (such as protectionist measures enacted in response to weak economic conditions), labor (such as card-check legislation or changes to the Railway Labor Act affecting FedEx Express
employees), environmental (such as global climate change legislation) or postal rules;

any impact on our business from disruptions or modifications in service by the USPS, which is a significant customer and vendor of FedEx, as a consequence of the USPSs current financial difficulties or any
resulting structural changes to its operations, network, service offerings or pricing;



increasing costs, the volatility of costs and funding requirements and other legal mandates for employee benefits, especially pension and healthcare benefits;

the increasing costs of compliance with federal and state governmental agency mandates, including those related to healthcare benefits, and defending against inappropriate or unjustified enforcement of other actions by
such agencies;



changes in foreign currency exchange rates, especially in the Chinese yuan, euro, Brazilian real, Canadian dollar and the British pound, which can affect our sales levels and foreign currency sales prices;



market acceptance of our new service and growth initiatives;



any liability resulting from and the costs of defending against class-action litigation, such as wage-and-hour and discrimination and retaliation claims, and any other legal or governmental proceedings;



the outcome of future negotiations to reach new collective bargaining agreements  including with the union that represents the pilots of FedEx Express (the current pilot contract became amendable in March 2013,
and the parties are currently in negotiations);



the impact of technology developments on our operations and on demand for our services, and our ability to continue to identify and eliminate unnecessary information technology redundancy and complexity throughout the
organization;



widespread outbreak of an illness or any other communicable disease, or any other public health crisis;



availability of financing on terms acceptable to us and our ability to maintain our current credit ratings, especially given the capital intensity of our operations; and



other risks and uncertainties you can find in our press releases and SEC filings, including the risk factors identified under the heading Risk Factors in Managements Discussion and Analysis of
Results of Operations and Financial Condition in our Annual Report, as updated by our quarterly reports on Form 10-Q.

As a result of
these and other factors, no assurance can be given as to our future results and achievements. Accordingly, a forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or
circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or alter any forward-looking statements, whether as a result
of new information, future events or otherwise.

As of August 31, 2013, there had been no material changes in our market risk sensitive instruments and positions since our disclosures in
our Annual Report.

The principal foreign currency exchange rate risks to which we are exposed are in the Chinese yuan, euro, Brazilian real, Canadian
dollar and the British pound. Historically, our exposure to foreign currency fluctuations is more significant with respect to our revenues than our expenses, as a significant portion of our expenses are denominated in U.S. dollars, such as aircraft
and fuel expenses. During the first three months of 2014, the U.S. dollar strengthened relative to the currencies of the foreign countries in which we operate as compared to May 31, 2013; however, this strengthening did not have a material
effect on our results.

While we have market risk for changes in the price of jet and vehicle fuel, this risk is largely mitigated by our variable fuel
surcharges. However, our fuel surcharges for FedEx Express and FedEx Ground have a timing lag of approximately six to eight weeks before they are adjusted for changes in fuel prices. Our fuel surcharge index also allows fuel prices to fluctuate
approximately 2% for FedEx Express and approximately 4% for FedEx Ground before an adjustment to the fuel surcharge occurs. Therefore, our operating income may be affected should the spot price of fuel suddenly change by a significant amount or
change by amounts that do not result in an adjustment in our fuel surcharges.

Item 4. Controls and Procedures

The management of FedEx, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our
disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in
the SECs rules and forms, including ensuring that such information is accumulated and communicated to FedEx management as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive
and financial officers have concluded that such disclosure controls and procedures were effective as of August 31, 2013 (the end of the period covered by this Quarterly Report on Form 10-Q).

During our fiscal quarter ended August 31, 2013, no change occurred in our internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.

For a description of all material pending legal proceedings, see Note 8 of the accompanying unaudited condensed consolidated financial statements.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in our Annual Report (under the heading Risk Factors in
Managements Discussion and Analysis of Results of Operations and Financial Condition) in response to Part I, Item 1A of Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information on FedExs repurchases of our common stock during the first quarter of 2014:

ISSUER PURCHASES OF EQUITY SECURITIES

Period

Total Number ofShares Purchased

Average PricePaid per Share

Total Number ofShares Purchasedas Part ofPubliclyAnnouncedPrograms

MaximumNumber ofShares That MayYet Be PurchasedUnder thePrograms

June 1-30, 2013

998,561

$

96.12

998,561

9,189,439

July 1-31, 2013

1,733,325

99.23

1,733,325

7,456,114

Aug. 1-31, 2013

93,217

104.97

93,217

7,362,897

Total

2,825,103

98.32

2,825,103

The repurchases were made under two share repurchase programs that were approved by our Board of Directors. The repurchase
program announced in July 2003 authorized us to purchase, in the open market or in negotiated or block transactions, up to an aggregate of 5 million shares of our common stock. There are now no shares remaining authorized for purchase under
this program. The repurchase program announced in March 2013 authorized us to purchase, in the open market or in negotiated or block transactions, up to an aggregate of 10 million shares of our common stock. A total of 7,362,897 shares remain
authorized for purchase under the 2013 share repurchase program, which is the only such program that currently exists. This program does not have an expiration date.

Item 6. Exhibits

Exhibit

Number

Description of Exhibit

10.1

Amendment dated June 24, 2013, amending the Transportation Agreement dated April 23, 2013 between the United States Postal Service and Federal Express Corporation. Confidential treatment has been requested for confidential
commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Amendment dated June 24, 2013, amending the Transportation Agreement dated April 23, 2013 between the United States Postal Service and Federal Express Corporation. Confidential
treatment has been requested for confidential commercial and financial information, pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

12.1

Computation of Ratio of Earnings to Fixed Charges.

15.1

Letter re: Unaudited Interim Financial Statements.

31.1

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

31.2

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.

32.1

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.